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HomeMy WebLinkAboutAd Valorem taxes supplemental 3 Village Circle, Suite 202 ~Westlake, Texas 76262 Metro: 817-430-0941 ~ Fax: 817-430-1812 ~ www.westlake-tx.org MEMORANDUM DATE: June 25, 2010 TO: Honorable Mayor and Town Council FROM: Tom Brymer, Town Manager/CEO Westlake Academy SUBJECT: Supplemental Information re: Ad Valorem Taxes Please find the attached supplemental information for your review and consideration regarding ad valorem taxes. This information is in addition to the data that is found in the on-line agenda packet. If you have any questions, please do not hesitate to contact me. Attachments 1) Memo from Boyle & Lowry - Cathy Cunningham, dated June 21, 2010 2) Texas State Comptroller Exemptions Q&A 3) Ad Valorem Tax Rates & Exemptions for Neighboring Cities/Towns a. Local Option Exemption b. Homestead Exemption c. Tax Rates of Neighboring Municipalities 4) Average Tarrant Appraisal District (TAD) Values in Westlake - By Neighborhood 5) Can citizens vote on property taxes? - excerpt from Texas Municipal League 6) Strategic Communication Plan BOYLE & LOWRY, L.L.P. ATTORNEYS AND COUNSELORS MEMO 4201 WINGREN, SUITE 108 IRVING, TEXAS 75062-2763 (972) 650-7100 telephone (972) 650-7105 telecopier www.boyle-lowry.com DATE: June 21, 2010 REVISED TO: Tom Brymer Westlake Town Manager Copy: Stan Lowry Boyle & Lowry L.L.P. FROM: Cathy Cunningham Boyle & Lowry RE: Property Tax Exemptions for Homes ________________________________________________________________________ This memo addresses tax exemptions available for homes. The Texas Tax Code provides for a number of tax exemptions, and not all of them require municipal action, that is, certain exemptions occur even if a city or town does not adopt the exemption. A complete list of exemptions is set out at the end of this memo. If there are additional exemptions you would like me to address further, please let me know. At this time, only exemptions available for homes are addressed. One of the primary areas of interest, as I understand it, is whether or not there are deadlines the Town must meet in order to allow for exemptions in the event the Town begins utilizing a property tax. The statutes do not address that question in those exact words. However, based upon the effective date for the various exemptions and the deadline for applying for the exemption, I have attempted to answer that question based upon such information, applying the information to the question in a logical manner. However, the exemptions are administered by the Appraisal District. I would strongly recommend a meeting with the Appraisal District in preparation for enacting a property tax and exemptions to ensure a smooth transition to this new process for the Town. Common Property Tax Exemptions for Homes Homestead Exemptions County: Exemption of $3,000.00 School District: Exemption of $15,000.00. 6/25/10 1 Other taxing units (municipalities): Another taxing unit may adopt a percentage of the value of the home as an exemption. If the percentage is less than $5,000.00, the exemptions will be for $5,000.00. A percentage may not exceed twenty percent (20%). Deadline: Is there a deadline for obtaining this exemption? The taxpayer must qualify for the exemption on January 1 of the applicable taxable year in order to qualify.1 However, I did not see that the taxing unit had to have passed the exemption by that date. Indeed, as long as a person met the qualifications on that date (that is they owned the home) they could apply for the exemption up to a year after the time the taxes became delinquent.2 However, there is a deadline for the taxing unit to pass the exemption? Section 11.13(n) states “(n) In addition to any other exemptions provided by this section, an individual is entitled to an exemption from taxation by a taxing unit of a percentage of the appraised value of his residence homestead if the exemption is adopted by the governing body of the taxing unit before July 1 in the manner provided by law for official action by the body. If the percentage set by the taxing unit produces an exemption in a tax year of less than $5,000 when applied to a particular residence homestead, the individual is entitled to an exemption of $5,000 of the appraised value. The percentage adopted by the taxing unit may not exceed 20 percent.” [Emphasis added.] Legal Authority for Exemption: Texas Tax Code §11.13. For County taxes, see also Texas Constitution Article VIII, Section 1-a. School districts - §11.13(b)-(d); County - §11.13(a); other taxing units - §11.13(n). 65 / Disabled Exemption School District: In addition to the exemption above, a disabled adult or an adult who is over 65 is entitled to an exemption of $10,000.00. If the owner is over 65 and disabled, the owner does not get two exemptions – the owner must choose one of the $10,000.00 exemptions. Any Taxing Unit – if the governing body of a taxing unit has voted to approve the exemption for an individual 65 or older or disabled, then a $3,000.00 exemption may be claimed. A governing body may adopt a larger exemption. 1 § 11.42. Exemption Qualification Date (a) Except as provided by Subsections (b) and (c) and by Sections 11.421, 11.422, 11.434, 11.435, and 11.436, eligibility for and amount of an exemption authorized by this chapter for any tax year are determined by a claimant's qualifications on January 1. A person who does not qualify for an exemption on January 1 of any year may not receive the exemption that year. (b) An exemption authorized by Section 11.11 is effective immediately on qualification for the exemption. (c) An exemption authorized by Section 11.13(c) or (d) is effective as of January 1 of the tax year in which the person qualifies for the exemption and applies to the entire tax year. (d) A person who acquires property after January 1 of a tax year may receive an exemption authorized by Section 11.17, 11.18, 11.19, 11.20, 11.21, 11.23, 11.231, or 11.30 for the applicable portion of that tax year immediately on qualification for the exemption. 2 § 11.431. Late Application of Homestead Exemption. (a) The chief appraiser shall accept and approve or deny an application for a residence homestead exemption, including a disabled veteran residence homestead exemption, after the deadline for filing it has passed if it is filed not later than one year after the delinquency date for the taxes on the homestead. (b) If a late application is approved after approval of the appraisal records by the appraisal review board, the chief appraiser shall notify the collector for each unit in which the residence is located. The collector shall deduct from the person's tax bill the amount of tax imposed on the exempted amount if the tax has not been paid. If the tax has been paid, the collector shall refund the amount of tax imposed on the exempted amount. 6/25/10 2 Deadline: Is there a deadline for obtaining this exemption? The statute states that the exemption is effective as of January 1 of the year in which the person qualifies for the exemption. That means, if a person becomes disabled or turns 65 in the year 2010, their exemption is effective as of January 1 of that year.3 However, I did not see that the taxing unit had to have passed the exemption by that date. Since these exemptions are part of the statute providing for homestead exemptions, the same time limits should apply for this portion of the homestead exemption as set out above - a taxpayer may apply for these exemptions up to a year after the time the taxes became delinquent.4 Legal Authority for Exemption: Texas Tax Code §11.13(d), except for School districts – see §11.13(c). 65 / Disabled Tax Ceiling Taxing Unit: In addition to the exemptions mentioned above, a disabled adult or an adult over 65 is entitled to a “tax ceiling” on the taxes imposed by a school district, county, municipality or junior college, if the taxing unit has authorized the ceiling. (See Texas Tax Code §§ 11.26 (school district) and 11.261 (municipalities).) There is no statutory authority for a tax ceiling by a taxing unit other than those noted above. Deadline: This tax ceiling would become effective the year following the year it was enacted.5 3 § 11.42. Exemption Qualification Date (a) Except as provided by Subsections (b) and (c) and by Sections 11.421, 11.422, 11.434, 11.435, and 11.436, eligibility for and amount of an exemption authorized by this chapter for any tax year are determined by a claimant's qualifications on January 1. A person who does not qualify for an exemption on January 1 of any year may not receive the exemption that year. (b) An exemption authorized by Section 11.11 is effective immediately on qualification for the exemption. (c) An exemption authorized by Section 11.13(c) or (d) is effective as of January 1 of the tax year in which the person qualifies for the exemption and applies to the entire tax year. (d) A person who acquires property after January 1 of a tax year may receive an exemption authorized by Section 11.17, 11.18, 11.19, 11.20, 11.21, 11.23, 11.231, or 11.30 for the applicable portion of that tax year immediately on qualification for the exemption. [Emphasis added.] 4 § 11.431. Late Application of Homestead Exemption. (a) The chief appraiser shall accept and approve or deny an application for a residence homestead exemption, including a disabled veteran residence homestead exemption, after the deadline for filing it has passed if it is filed not later than one year after the delinquency date for the taxes on the homestead. (b) If a late application is approved after approval of the appraisal records by the appraisal review board, the chief appraiser shall notify the collector for each unit in which the residence is located. The collector shall deduct from the person's tax bill the amount of tax imposed on the exempted amount if the tax has not been paid. If the tax has been paid, the collector shall refund the amount of tax imposed on the exempted amount. 5 § 11.261. Limitation of County, Municipal, or Junior College District Tax on Homesteads of Disabled and Elderly (a) This section applies only to a county, municipality, or junior college district that has established a limitation on the total amount of taxes that may be imposed by the county, municipality, or junior college district on the residence homestead of a disabled individual or an individual 65 years of age or older under Section 1-b(h), Article VIII, Texas Constitution. (b) The tax officials shall appraise the property to which the limitation applies and calculate taxes as on other property, but if the tax so calculated exceeds the limitation provided by this section, the tax imposed is the amount of the tax as limited by this section, except as otherwise provided by this section. The county, municipality, or junior college district may not increase the total annual amount of ad valorem taxes the county, municipality, or junior college district imposes on the residence homestead of a disabled individual or an individual 65 years of age or older above the amount of the taxes the county, municipality, or junior college district imposed on the residence homestead in the first tax year, other than a tax year preceding the tax year in which the county, municipality, or junior college district established the limitation described by Subsection (a), in which the individual qualified that residence homestead for the exemption provided by Section 11.13(c) for a disabled individual or an individual 65 years of age or older. If the individual qualified that residence homestead for the exemption after the beginning of that first year and the residence homestead remains eligible for the exemption for the next year, and if the county, municipal, or junior college district taxes imposed on the residence homestead in the next year are less than the amount of taxes imposed in that first year, a county, municipality, or junior college district may not subsequently increase the total 6/25/10 3 Legal Authority for Exemption: Texas Tax Code §§11.26 and 11.261. Disabled Veteran’s Exemption State law provides for a 100% exemption for veterans who have a 100% disability rating. This exemption does not require municipal action to be effective. Legal Authority: Texas Tax Code §11.1316 Application of Exemptions in this Area A chart is attached that shows the 2009 ad valorem tax rates for Tarrant County and the exemptions offered by the cities in the Tarrant Appraisal District.. (http://www.tad.org/WebPages/2009_tax_rates.htm ) Exemption for Schools Although I was not asked to address the exemption for schools, I would assume that the Town’s charter school has already applied for this exemption. Exemptions Under the Texas Tax Code The following is a list of the exemptions set out in the Texas Tax Code. After each exemption, I have shown whether or not any action by the Town is required to effectuate the exemption. If municipal action is required to effectuate the exemption, I have also bolded that exemption. In addition, in a few exemptions provide for the possibility of municipal action to remove the exemption. In such cases, I have noted that such action is provided for by the statute, but since I do not understand such information to be of primary interest at this point, those entries are not bolded. Texas Tax Code sections: annual amount of ad valorem taxes it imposes on the residence homestead above the amount it imposed on the residence homestead in the year immediately following the first year, other than a tax year preceding the tax year in which the county, municipality, or junior college district established the limitation described by Subsection (a), for which the individual qualified that residence homestead for the exemption. [Emphasis added.] [Subsections (c)-(m) not shown.] 6 § 11.131. Residence Homestead of 100 Percent or Totally Disabled Veteran (a) In this section:(1) “Disabled veteran” has the meaning assigned by Section 11.22. (2) “Residence homestead” has the meaning assigned by Section 11.13. (b) A disabled veteran who receives from the United States Department of Veterans Affairs or its successor 100 percent disability compensation due to a service-connected disability and a rating of 100 percent disabled or of individual unemployability is entitled to an exemption from taxation of the total appraised value of the veteran's residence homestead. 6/25/10 4 11.11 Public Property – Exemption provided by State law, no municipal action required 11.111 Public Property Used to Provide Transitional Housing for Indigent Persons – Municipal action required if Town wishes to adopt such an exemption 11.12 Federal Exemptions - Exemption provided by State law, no municipal action required 11.13 Residence Homestead – Municipal action required for municipal portion of exemption (automatic for school district and county) 11.131 Residence Homestead of 100 Percent to Totally Disabled Veteran – total exemption which does not require any municipal action 11.135 Continuation of Residence Homestead Exemption While Replacement Structure Is Constructed; Sale of Property - Exemption provided by State law, no municipal action required 11.14 Tangible Personal Property Not Producing Income – The exemption is provided by state law and does not require any action by a municipality, but if the Town wishes to remove the property from the exemption, the Town may take certain actions to do so. 11.145 Income-Producing Tangible Personal Property Having Value of Less Than $500 - Exemption provided by State law, no municipal action required. 11.146 Mineral Interest having Value of Less Than $500 - Exemption provided by State law, no municipal action required. 11.15 Family Supplies - Exemption provided by State law, no municipal action required. 11.16 Farm Products - Exemption provided by State law, no municipal action required. 11.17 Cemeteries - Exemption provided by State law, no municipal action required. 11.18 Charitable Organizations - Exemption provided by State law, no municipal action required. 11.1801 Charity Care and Community Benefits Requirements for Charitable Hospital - Exemption provided by State law, no municipal action required. 11.181 Charitable Organizations Improving Property for Low-income housing - Exemption provided by State law, no municipal action required. 11.182 Community Housing Development Organizations Improving Property for Low- Income and Moderate-Income Housing: Property Previously Exempt - Exemption provided by State law, no municipal action required. 11.1825 Organizations Constructing or Rehabilitating Low-Income housing: Property Not Previously Exempt – Subsection (v) provides that municipal action is required if property is in a county of 1.4 million and provides for certain procedures. 11.1826 Monitoring of Compliance with Low-Income and Moderate –Income Housing Exemptions – Not applicable to this question – this section just sets out procedural requirements. Does not provide for a new exemption. 11.183 Association Providing Assistance to Ambulatory Health care Centers - Exemption provided by State law, no municipal action required. 11.184 Organizations Engaged Primarily in Performing Charitable Functions - Exemption provided by State law, no municipal action required. 6/25/10 5 11.185 Colonia Model Subdivision Program - Exemption provided by State law, no municipal action required. 11.19 Youth Spiritual, Mental, and Physical Development Associations - Exemption provided by State law, no municipal action required. 11.20 Religious Organizations - Exemption provided by State law, no municipal action required. 11.201 Additional Tax on Sale of Certain Religious Organization Property – Not applicable to this question - this section just sets out certain procedural requirements. Does not provide for a new exemption. 11.21 Schools - Exemption provided by State law, no municipal action required. 11.22 Disabled Veterans - Exemption provided by State law, no municipal action required. 11.23 Miscellaneous Exemptions - Exemption provided by State law, no municipal action required. 11.24 Historic Sites - Exemption provided by State law, no municipal action required. 11.25 Marine Cargo Containers used Exclusively in International Commerce - Exemption provided by State law, no municipal action required 11.251 Tangible Personal Property Exempt – (Freeport) – Taxing unit can take action to tax, no action needed for exemption. 11.252 Motor Vehicles Leased for Personal Use – No city action required to effectuate the exemption. However, cities could have passed an ordinance to require taxation of the property (remove the exemption), but such an ordinance needed to be passed before 2002. 11.253 Tangible Personal Property in Transit - No action needed for exemption, but subsection (j) provides that a municipality may take action to tax the property (remove the exemption). The action must occur before January 1 of the year the municipality proposes to tax the property. There are certain procedural requirements. 11.254 Motor Vehicle used for Production of Income and for Personal Activities - Exemption provided by State law, no municipal action required. 11.26 Limitation of School Tax on Homesteads of Elderly or Disabled – Not applicable to municipalities. – Only concerns school taxes. 11.261 Limitation of County, Municipal, or Junior College District Tax on Homesteads of Disabled and Elderly 11.27 Solar and Wind-powered Energy Devices - Exemption provided by State law, no municipal action required. 11.271 Offshore Drilling Equipment Not in Use - Exemption provided by State law, no municipal action required. 11.28 Property Exempted From City Taxation by Agreement – This section provides for tax abatement agreements. City action is required on a case by case basis to enter into a contract. Agreements can only be prospective – cannot retroactively grant an abatement. 11.29 Intercoastal Waterway Dredge Disposal Site - Exemption provided by State law, no municipal action required. 11.30 Nonprofit Water Supply or Wastewater Service Corporation - Exemption provided by State law, no municipal action required. 6/25/10 6 11.31 Pollution Control Property - Exemption provided by State law, no municipal action required. 11.32 Certain Water Conservation Initiatives – Municipal action required to effectuate this exemption. 11.33 Raw Cocoa and Green Coffee Held in Harris County – Only applicable to Harris county. 11.34 Limitation of Taxes on Real Property in Designated Areas of Certain Municipalities – Requires a city population of less than 10,000. Municipal action and an election is required to effectuate this exemption. H:\West Lake\wl-taxes\wl-taxes-exemptions.doc 6/25/10 7 2009 Tax Rates per $100 Valuation for Tarrant County TDC Jurisdiction Name Tax Rate State Mandated Local Option M&O* Rate I&S** Rate Vet1 Vet2 Vet3 Vet4 Fpt AB Ceil GITHS O65 DP HS O65 DP 001 Azle 0.631 15000 0.49150.1395 5000 7500 10000 12000Yes 002 Bedford 0.463348 50000 0.2990960.164252 5000 7500 10000 12000 YesYes 003 Benbrook 0.6575 1%3000050000.6151650.042335 5000 7500 10000 12000 Yes 004 Blue Mound 0.638 12000120000.6380 5000 7500 10000 12000 YesYes 005 Colleyville 0.3559 65000650000.2986380.057262 5000 7500 10000 12000 Yes 006 Crowley 0.5755 40000400000.3410150.234485 5000 7500 10000 12000 Yes 007 Dalworthington Gardens 0.262739 60000600000.2109310.051808 5000 7500 10000 12000Yes Yes 008 Edgecliff Village 0.294112 0.2941120 5000 7500 10000 12000 Yes 009 Everman 0.904127 35000350000.7383090.165818 5000 7500 10000 12000 Yes 010 Forest Hill 1.06 40000 0.8830980.176902 5000 7500 10000 12000 011 Grapevine 0.35 20%60000100000.136430.21357 5000 7500 10000 12000Yes 013 Keller 0.44219 1%40000100000.310590.1316 5000 7500 10000 12000 YesYes 014 Kennedale 0.7225 50000500000.5727290.149771 5000 7500 10000 12000YesYes 015 Lakeside 0.323516 50000500000.3235160 5000 7500 10000 12000Yes 016 Lake Worth 0.42859 50000 0.1159380.312652 5000 7500 10000 12000 Yes 017 Mansfield 0.71 50000100000.443690.26631 5000 7500 10000 12000YesYesYes 018 N Richland Hills 0.57 15%36000360000.3541160.215884 5000 7500 10000 12000YesYesYes 019 Pantego 0.37327 20%50000100000.3172080.056062 5000 7500 10000 12000 020 Richland Hills 0.473042 30000 0.4237070.049335 5000 7500 10000 12000Yes Yes 021 Saginaw 0.449115 50000300000.2639060.185209 5000 7500 10000 12000YesYes 022 Southlake 0.462 75000750000.3320.13 5000 7500 10000 12000Yes Yes 023 Westover Hills 0.366739 0.3667390 5000 7500 10000 12000Yes Yes 024 Arlington 0.648 20%60000600000.44670.2013 5000 7500 10000 12000YesYesYes 025 Euless 0.47 20%35000 0.3607910.109209 5000 7500 10000 12000Yes Yes 026 Fort Worth 0.855 20%40000400000.71090.1441 5000 7500 10000 12000YesYesYes 027 Haltom City 0.5983 10%50000400000.39780.2005 5000 7500 10000 12000YesYesYes 028 Hurst 0.535 20%35000350000.4097910.125209 5000 7500 10000 12000 Yes 029 River Oaks 0.82 15000 0.820 5000 7500 10000 12000 Yes 030 White Settlement 0.686037 20%37000100000.5171040.168933 5000 7500 10000 12000YesYes 031 Watauga 0.580763 40000 0.419540.161223 5000 7500 10000 12000 Yes 032 Westworth Village 0.5 20%50000 300000.19430.3057 5000 7500 10000 12000 Yes 033 Burleson 0.694 0.53180.1622 5000 7500 10000 12000 Yes 034 Haslet 0.267197 20%50000 0.2133930.053804 5000 7500 10000 12000YesYesYes 036 Pelican Bay 0.898499 9000 0.04430.854199 5000 7500 10000 12000YesYes Yes 038 Grand Prairie 0.669998 1%45000300000.4848920.185106 5000 7500 10000 12000Yes Yes 039 Sansom Park 0.571627 1%20000100000.5716270 5000 7500 10000 12000Yes YesYes 041 Reno 0.42 15%10000100000.410.01 5000 7500 10000 12000 Yes 6/25/10 8 042 Flower Mound 0.4497 1000001000000.3308850.118815 5000 7500 10000 12000Yes 043 Roanoke 0.37512 20%4000045000.179020.1961 5000 7500 10000 12000Yes Yes 044 Town Of Trophy Club 0.47 35000 0.388380.08162 5000 7500 10000 12000Yes Yes 091 Tarrant County Hospital 0.227897 50000100000.2262550.001642 5000 7500 10000 12000YesYes 092 Tarrant County College 0.13767 5000030000.131260.00641 5000 7500 10000 12000YesYesYes 099 Regional Water District 0.02 50000100000.020 5000 7500 10000 12000Yes 220 Tarrant County 0.264 50000100000.2348230.029177 5000 7500 10000 12000YesYesYes 222 Emergency Services Dist 0.064 0.0640 5000 7500 10000 12000Yes 606 Trophy Club Mud #1 0.205 25000 0.136280.06872 5000 7500 10000 12000Yes 619 Live Oak Creek MUD 0.99 901 Arlington ISD 1.272 150001000010000 1.040.232 5000 7500 10000 12000YesYesYes 902 Birdville ISD 1.405 150001000010000 1.040.365 5000 7500 10000 12000Yes Yes 904 Everman ISD 1.27 150001000010000 1.040.23 5000 7500 10000 12000Yes Yes 905 Fort Worth ISD 1.322 150001000010000 1.040.282 5000 7500 10000 12000YesYesYes 906 Grapevine-Colleyville ISD 1.29 150001000010000 29600 1.040.25 5000 7500 10000 12000Yes Yes 907 Keller ISD 1.4863 150001000010000 10000 1.040.4463 5000 7500 10000 12000Yes Yes 908 Mansfield ISD 1.45 150001000010000 1.040.41 5000 7500 10000 12000Yes Yes 910 Lake Worth ISD 1.67 150001000010000 50000 500001.170.5 5000 7500 10000 12000 Yes 911 Northwest ISD 1.355 150001000010000 1.020.335 5000 7500 10000 12000Yes Yes 912 Crowley ISD 1.535 15000100001000010% 1.040.495 5000 7500 10000 12000Yes Yes 914 Kennedale ISD 1.48861 150001000010000 25000250001.170.31861 5000 7500 10000 12000 YesYes 915 Azle ISD 1.19 150001000010000 1.040.15 5000 7500 10000 12000 Yes 916 H-E-B ISD 1.295453 1500010000100001%500050001.040.255453 5000 7500 10000 12000Yes Yes 917 Castleberry ISD 1.2133 150001000010000 1.040.1733 5000 7500 10000 12000 Yes 918 Eagle Mtn-Saginaw ISD 1.4658 150001000010000 15000150000.99580.47 5000 7500 10000 12000Yes Yes 919 Carroll ISD 1.415 150001000010000 35000 1.040.375 5000 7500 10000 12000 Yes 920 White Settlement ISD 1.54 150001000010000 20000 1.040.5 5000 7500 10000 12000 Yes 921 Aledo ISD 1.4252 150001000010000 1.170.2552 5000 7500 10000 12000Yes Yes 922 Burleson ISD 1.54 150001000010000 25000250001.040.5 5000 7500 10000 12000 Yes 923 Godley ISD 1.071481 150001000010000 0.92150.149981 5000 7500 10000 12000 YesYes 924 Lewisville ISD 1.4087 150001000010000 1.040.3687 5000 7500 10000 12000Yes Yes * Maintenance and Operations rate ** Interest and Sinking Fund rate HS = Homestead exemption value O65 = Over 65 exemption value DP = Disabled Person exemption value Fpt = Freeport exemption recognized AB = Abatements in effect GIT = Goods In Transit Ceil = Grant Ceilings Tarrant Appraisal District / Page Modified: 04/19/2010 6/25/10 9 Web Site Survey Exemptions Do I, as a homeowner, get a tax break from property taxes? You may apply for homestead exemptions on your principal residence. Homestead exemptions remove part of your home's value from taxation, so they lower your taxes. For example, your home is appraised at $100,000, and you qualify for a $15,000 exemption (this is the amount mandated for school districts), you will pay school taxes on the home as if it was worth only $85,000. Taxing units have the option to offer a separate exemption of up to 20 percent of the total value. Do all homes qualify for homestead exemptions? No, only a homeowner's principal residence qualifies. To qualify, a home must meet the definition of a residence homestead: The home's owner must be an individual (for example: not a corporation or other business entity) and use the home as his or her principal residence on January 1 of the tax year. If you are age 65 or older, the January 1 ownership and residency are not required for the age 65 homestead exemption. What is a homestead? A homestead can be a separate structure, condominium or a manufactured home located on owned or leased land, as long as the individual living in the home owns it. A homestead can include up to 20 acres, if the land is owned by the homeowner and used as a yard or for another purpose related to the residential use of the homestead. What homestead exemptions are available? There are several types of exemptions you may receive. School taxes: All residence homestead owners may receive a $15,000 homestead exemption from their home's value for school taxes. • County taxes: If a county collects a special tax for farm-to-market roads or flood control, a residence homestead owner may receive a $3,000 exemption for this tax. If the county grants an optional exemption for homeowners age 65 or older or disabled, the owners will receive only the local-option exemption. • Age 65 or older and disabled exemptions: Individuals 65 and older and/or disabled residence homestead owners may qualify for a $10,000 homestead exemption for school taxes, in addition to the $15,000 exemption for all homeowners. If the owner qualifies for both the $10,000 exemption for 65 and older homeowners and the $10,000 exemption for disabled homeowners, the owner must choose one or the other for school taxes. The owner cannot receive both exemptions. • Optional percentage exemptions: Any taxing unit-including a city, county, school, or special district-may offer an exemption of up to 20 percent of a home's value. But, no matter what the percentage is, the amount of an optional exemption cannot be less than $5,000. Each taxing unit decides if it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which an owner qualifies. The taxing unit must decide before July 1 of the tax year to offer this exemption. • Optional 65 or older or disabled exemptions: Any taxing unit may offer an additional exemption amount of at least $3,000 for taxpayers age 65 or older and/or disabled. • How do I get a general $15,000 homestead exemption? You may file an Application for Residential Homestead Exemption with your appraisal district for the $15,000 homestead exemption up to one year after the taxes on the homestead are due. Once you receive the exemption, you do not need to reapply unless the chief appraiser sends you a new application. In that case, you must file the new application. If you should move or your qualification ends, you must inform the appraisal district in writing before the next May 1st. A list of appraisal district addresses and phone numbers is available online. Page 1of 4Exemptions 6/25/2010http://www.window.state.tx.us/taxinfo/proptax/exmptns.html 6/25/10 10 How do I get an additional $10,000 65 or older or disabled homestead exemption? You may apply to the appraisal district up to one year after the date you turn 65 or qualify for disability, or up to one year after the taxes are due, whichever is later. If your application is approved, you will receive the exemption for the entire year in which you turn 65 or become disabled and for subsequent years as long as you own a qualified homestead. Beginning in 2005, if your date of birth was on your original homestead application or other written correspondence to the appraisal district about your homestead you will automatically receive the 65 or older exemption without applying, if you are entitled to the general homestead exemption. How do I qualify for a disabled person's exemption? You are eligible for this exemption if you can't engage in gainful work because of a physical or mental disability or you are 55 years old and blind and can't engage in your previous work because of the blindness. To qualify, you must meet the Social Security definition for disabled. You qualify if you receive disability benefits under the federal Old Age, Survivors and Disability Insurance Program administered by the Social Security Administration. Disability benefits from any other program do not automatically qualify you. To prove your eligibility, you may need to provide the appraisal district with information on disability ratings from the civil service, retirement programs, or from insurance documents, military records, or a doctor's statement. What is the deadline for filing for a homestead exemption? You may file for any homestead exemption up to one year after the delinquency date. The delinquency date is normally February 1st. If you are 65 or older or disabled, you qualify for the exemption on the date you become 65 or become disabled. To receive the exemption for that year, 65 or older or disabled homeowners must apply for the exemption no later than one year from the date you qualify or one year after the delinquency date, whichever is later. If you miss the deadline you may apply for the following year. May I continue to receive the residence homestead exemption on my home if I move away temporarily? If you temporarily move away from your home, you may continue to receive the exemption if you do not establish a principal residence elsewhere, you intend to return to the home, and you are away less than two years. You may continue to receive the exemption if you do not occupy the residence for more than two years only if you are in military service or live in a facility providing services related to health, infirmity or aging. What is a homestead tax ceiling? It is a limit on the amount of taxes you must pay on your residence. If you qualify your home for a 65 and older or disabled person homestead exemption for school taxes, the school taxes on that home can't increase as long as you own and live in that home. The tax ceiling is the amount you pay in the year that you qualified for the 65 or older or disabled person exemption. The school taxes on your home may go below the ceiling but not above the amount of the ceiling. However, if you improve the home (other than normal repairs or maintenance), the tax ceiling may go higher because of the new additions. For example, if you add on a garage or game room to the house after you have established a tax ceiling, the ceiling will be adjusted to a higher level to reflect the value of that addition. Does the school tax ceiling transfer when a person who is age 65 or older or is disabled or is the surviving spouse (age 55 or older) of a person who was age 65 or older moves to another home? A percentage of the school tax ceiling may be transferred. The ceiling on the new home would be calculated to give you the same percentage of tax paid as the ceiling on the original home. For example, if you currently have a tax ceiling of $100, but would pay $400 without the ceiling, the percentage of tax paid is 25 percent. If you move to another home and the taxes on the new homestead would normally be $1,000 in the first year, the new tax ceiling would be $250, or 25 percent of $1,000. To transfer the school tax ceiling, you may request a certificate from the chief appraiser in the last appraisal district in which you received the tax ceiling. You present the transfer certificate to the chief appraiser in the district where the new home is located, when you apply for homestead exemptions on the new home. If I am the surviving spouse of a disabled person, am I entitled to the school tax ceiling? No, only surviving spouses (55 years of age or older) of persons who were 65 years of age or older when they died may benefit from the tax ceiling. Page 2of 4Exemptions 6/25/2010http://www.window.state.tx.us/taxinfo/proptax/exmptns.html 6/25/10 11 If I am 65 years of age or older, disabled, or a surviving spouse who is age 55 or older, does a tax ceiling apply to county, city or junior college district property taxes? Yes, if the county commissioners court, city council or board of the junior college district authorizes a tax limitation on the homesteads of persons 65 years of age or older or disabled. The taxing unit's governing bodies or voters (by petition and election) may adopt the limitation. This local option exemption does not apply to other special districts such as water, hospital, etc. Can the local option ceiling transfer if the owner who is age 65 or older or disabled moves to another home? Yes, but the home must be located within the applicable taxing unit - city, county or junior college district. The ceiling on the new home is calculated the same as the school district. Can the local option ceiling transfer to another home owned by the surviving spouse who is 55 year of age or older? No, regardless of the underlying qualifications (65 and older or disabled person). If I own only 50 percent of the home I live in, do I qualify for the residence homestead exemption on the home? Yes. However, if you qualify for a homestead exemption and are not the sole owner of the property to which the homestead exemption applies, the exemption you receive is based on the interest you own. For example, you own a 50 percent interest in a homestead and will receive one half, or $7,500, of a $15,000 homestead offered by a school district. Is the disabled veteran's exemption the same as the disabled person's exemption? No. To receive a disabled veteran exemption, you must either be a veteran who was disabled while serving with the U.S. armed forces or the surviving spouse or child (under 18 years of age and unmarried) of a disabled veteran or of a member of the armed forces who was killed while on active duty. In order to qualify for a disabled person exemption, you can't engage in gainful work because of physical or mental disability or you are 55 years old and blind and can't engage in your previous work because of your blindness. If you receive disability benefits under the federal Old Age, Survivors and Disability Insurance Program administered by the Social Security Administration, you will qualify for the disabled person exemption. What is the amount of the disabled veteran's exemption? The exemption amount that a qualified disabled veteran receives depends on the veteran's disability rating from the branch of the armed service: Disability Rating Exemption Amount 10% to 29%$5,000 from the property's value 30% to 49%$7,500 from the property's value 50% to 69%$10,000 from the property's value 70% to 100%$12,000 from the property's value Disability Exemption The disabled veteran must be a Texas resident and must choose one property to receive the exemption. May I file for a disabled veteran's exemption after the deadline has passed? Yes. The deadline for filing for a disabled veteran's exemption is between January 1 and April 30 of the tax year. However, you may file for a disabled veteran's exemption up to one year from the delinquency date. To file for a disabled veteran's exemption, you must complete the Application for Disabled Veteran's or Survivor's Exemptions form. Page 3of 4Exemptions 6/25/2010http://www.window.state.tx.us/taxinfo/proptax/exmptns.html 6/25/10 12 If I lease a vehicle that I use for personal purposes, do I have to pay property taxes on the vehicle? In Texas, all property is taxable, unless exempt by state or federal law. Leased vehicles produce income for the leasing company and are taxable to the leasing company. In many leasing contracts, companies require their lessees to reimburse them for property taxes assessed on the vehicles. Leased vehicles that are not held for the primary purpose of income production by the lessee may be exempted. These vehicles include passenger cars or trucks with a shipping weight of not more than 9,000 pounds and leased for personal use. Personal use would mean using the vehicle more than 50 percent of its use (based on mileage) for activities that do not involve the production of income. The exemption applies only to vehicles subject to a lease entered into on or after January 2, 2001. Any leased vehicles contracted before January 2, 2001 would continue to be taxed. In addition, cities that passed an ordinance before January 1, 2002, could continue to tax personal leased vehicles. The law was effective on January 1, 2002. To qualify for the exemption, you must timely file an affidavit with the leasing company. You may print the Lessee's Affidavit of Primarily Non Income Producing Vehicle Use form or the leasing company could provide one for you. To receive the exemption, the leasing company must file a Lessor's Application for Personal Use Lease Automobile Exemptions with the county appraisal district where the property is located before April 30 of each year. The exemption application should contain all vehicles that are used primarily for personal use. If the leasing company does not file the application timely, the vehicle is not exempt for that year. If a religious or charitable organization purchases property during the year, may the organization receive an exemption on the new property for that year? Yes. The religious or charitable organization may receive a property tax exemption for the year in which it purchases qualifying property. To receive the exemption for that year, the organization has to file for the exemption within one year of acquiring the property. Required Plug-ins [ Adobe Reader ] Page 4of 4Exemptions 6/25/2010http://www.window.state.tx.us/taxinfo/proptax/exmptns.html 6/25/10 13 AD VALOREM TAX RATES AND EXEMPTIONS FOR NEIGHBORING CITIES/TOWNS Per section 11.13 (e) of the Texas Tax Code the Town is authorized to implement a fixed exemption amount for Over 65 or disabled adults of any amount, the minimum is $3,000. Neighboring municipalities have implemented over 65 and disabled exemptions ranging from $35,000 to $100,000. A. Local Option Exemption 6/25/10 14 AD VALOREM TAX RATES AND EXEMPTIONS FOR NEIGHBORING CITIES/TOWNS Per section 11.13 (n) of the Texas Tax Code the Town is authorized to implement a percentage Homestead exemption not to exceed 20% (the minimum is $5,000 e.g. a $20,000 mobile home with a 20% Homestead exemption would receive an exemption of $5,000 instead of $4,000). Five of nine neighboring municipalities have adopted Homestead exemptions ranging between 1% and 20%. The remaining four municipalities have elected not to impose this exemption. B. Homestead Exemption 6/25/10 15 AD VALOREM TAX RATES AND EXEMPTIONS FOR NEIGHBORING CITIES/TOWNS Once a Certified Tax Roll has been received by the Town Council from the Tarrant Appraisal District, the Town must utilize the certified tax values in conjunction with the approved budget to determine the maintenance and operations (M&O) and I&S rates it would like to assess. Neighboring municipalities have I&S rates between .05 and .21 and M&O rates between .13 and .71. C. Tax Rates of Neighboring Municipalities 6/25/10 16 AVERAGE TARRANT APPRAISAL DISTRICT VALUES IN WESTLAKE – BY NEIGHBORHOOD       The chart above reflects the average Tarrant Appraisal District home values in Westlake categorized by  neighborhood.  These values do NOT include vacant or unimproved land.  The average total TAD value for  residential properties in Westlake is $1,145,198.    Count of Homes by Neighborhood  ESTATES OF WESTLAKE 11 GLENWYCK FARMS 81 PAIGEBROOKE 2 ASPEN LANE (SHELBY ESTATES) 15 STAGECOACH HILLS 42 TERRA BELLA 1 VAQUERO 155 NOT ASSIGNED 31       $‐ $500,000  $1,000,000  $1,500,000  $2,000,000  $2,500,000  Estates of  Westlake Glenwyck  Farms Paige‐ brooke Aspen  Lane Stage‐ coach  Hills Terra  Bella VaqueroNot  Assigned Westlake  Avg. Impr Value Avg $1,161,52$1,142,86$1,523,93$388,212 $177,848 $310,700 $1,643,86$552,409 $862,669  Land Value Avg $108,636 $171,852 $520,520 $434,459 $57,164 $400,000 $340,935 $226,662 $282,529  To t a l    Av g .   TA D   Va l u e 6/25/10 17 Note: This is an excerpt from a document produced by the Texas Municipal League’s legal counsel called “Top Ten Questions”. This question is about instituting a property tax. Can citizens vote on property taxes (Bennett Sandlin)? City officials considering imposing a property tax often ask if citizen approval of property taxes is necessary. In addition, officials sometimes ask if they can go to the voters anyway for political “cover,” because property taxes tend to be very controversial. The answer to both questions is no. Citizen approval of the adoption of property taxes is neither required, nor is it permitted. According to the Texas Tax Code: “The governing body of each taxing unit…shall adopt a tax rate for the current tax year and shall notify the assessor for the unit of the rate adopted.” TEX. TAX CODE ANN. § 26.05 (Vernon 2001). Nothing in Chapter 25 of the Tax Code speaks to voter approval of tax rates. As such, none is required. Even if a city wants to submit property taxes to the voters, it is prohibited from doing so. When a state statute comprehensively covers an area of the law, as the Tax Code does for property taxes, local governments are preempted from changing the law on their own. Because the Tax Code speaks in detail about the procedures for adoption of city property tax rates, a court would likely find that voter referenda on property tax adoption are preempted by the Tax Code. Of course, cities are not prohibited from gauging the will of the public when it comes to property taxes or any other issue. A city could conduct a non-binding poll or survey to find out whether the public supports imposition of property taxes. Some cities conduct such polls through inserts in utility bills, for instance. On a related note, citizens are allowed to vote on subsequent property tax increases (after the initial adoption of the tax) that exceed the effective property tax rate by more than eight percent. This threshold rate—108 percent of the effective rate—is known as the “rollback rate.” Any adopted rate that exceeds the rollback rate allows the citizens 90 days to acquire a certain number of signatures to force a rollback election. TEX. TAX CODE ANN. § 26.07 (Vernon 2001). If a proper petition is received by the city, an election must be held on the issue of whether to “rollback” the tax increase to 108 percent of the effective rate. Somewhere in the neighborhood of half a dozen rollback elections are held around the state each year, and 64 percent have been historically successful in rolling back the tax rate to the rollback rate. Finally, it is sometimes asked whether home rule cities with the power of initiative and referendum may have their tax rates challenged by those processes. The answer is likely not. Texas cases have held that ordinances that rely on careful application of facts and figures are generally not subject to home rule voter initiative or referendum. 116 S.W.2d 783, (Tex. Civ. App. DATE, error ref’d). ABOUT THE AUTHOR: BENNETT SANDLIN, General Counsel Bennett Sandlin is General Counsel for the Texas Municipal League, where he helps cities primarily in the fields of tax, economic development, budget, and finance issues, including the municipal hotel occupancy tax and the economic development sales tax. Bennett is an instructor in Public Funds Investment Act training, and has served on the Comptroller’s E-Commerce and Technology Advisory Group. Bennett is a 1993 graduate of the University of Texas School of Law and has previously worked at the Municipal Affairs Division of the Texas Attorney General’s Office. 6/25/10 18 19 WORKING DRAFT Strategic Communication Plan “Why Did You Move to Westlake?” Westlake, Texas May 24, 2010 PLAN OBJECTIVE • Create a positive political climate in the midst of a difficult economy that supports creating a limited, but sustainable revenue source that preserves the community’s special and unique nature and quality of life and allows it to move forward. : • Create public acceptance and understanding that such an action is the responsible thing to do because: o The Town/Westlake Academy is unique and top-notch in what it offers residents in the way of services within available resources o We must grow responsibly o We must fulfill Westlake’s vision, not only for today, but the next 50 years To attain this objective, the following strategies and their attendant tactics will be used (note : strategies are not presented in any prioritized order as all of them will have to be utilized to attain the objective): STRATEGY Gauge public support and sentiment : Knowing community priorities is critical to making sure they are being met. Tactics -Use this situation to show funding for services now received, plus other services not currently received. : -Explain that possibility of a retail mall is remote and that development of the Circle T Ranch, while planned, it is intermittent at best. -Utilize annual citizens’ survey (i.e. Direction Finders) to assess community priorities, support and key issues. -Create or ensure a feedback mechanism to allow residents to share thoughts, ideas or suggestions about the town. -Build understanding and support for the idea that if “we are a Town, then we must be a Town”, i.e. that we cannot be a Town in name only effectively not providing services that preserve and protect the Town and its quality of life. STRATEGY Showcase need and create understanding : The current fiscal challenge is complicated and complex, yet it is important that it be simply, clearly and concisely explained to have public support, or minimize opposition. Tactics: 6/25/10 -Develop community “road show” for series of neighborhood meetings. Westlake residents are very engaged with impressive turnout at community meetings. This presents a tremendous opportunity to educate a captive audience by telling a story. In addition, it allows for third party champions to emerge, or showcase their support to other residents. -Develop Message Points (Attached): The budget situation presents a very real threat to the very special and unique nature and quality of life of Westlake. The community is too savvy to respond to direct threat, but messages should allow for residents to connect the dots (i.e. self discover). The messages should showcase the challenge as well as value a sustainable revenue source brings to preserving the community’s nature. -All Town services are undergoing extensive evaluation as to efficiency, effectiveness, and cost. It is important that residents recognize the Town is examining all the services it provides, why they are provided, their service levels, and cost. Need to communicate and highlight which services have undergone reductions, improved efficiencies and other practices that have undergone change. STRATEGY Capitalize on “common bond” to unify all residents : Nearly all residents moved to Westlake for a reason. That reason may vary to a degree, but there is one clear and unmistakable theme. All or nearly all residents, whether living in Stagecoach or Vaquero, came to Westlake for the truly unique quality of life and community’s special and unique nature. Essential to preserving that uniqueness is ensuring the community can sustain itself financially. -Create a “Why did you come to Westlake?” theme Tactics: • Create understanding that one of the things that draw residents and businesses to Westlake is its sparse development pattern. However, this comes at a cost (i.e. a more dense development pattern could be more cost effective for provision of Town services, but this is not why they chose Westlake. While the current land use pattern of Westlake comes with a cost, we have a higher standard that residents have clearly supported over the years. • Whatever happens, they will at least control the community’s destiny STRATEGY Create Opportunity to for residents to “self-discover” and have ownership in solution : -Implement theme “Why did you come?” to Westlake in communications and messages Tactics: -Introduce theme during meetings by engaging residents to share their personal stories 6/25/10 20 -Clearly and concisely explain budget situation using graphs to show revenue projections vs. current -Introduce the concept of the “new normal” -Subtly contrast Westlake with neighboring cities. • Use slides outlining revenue sources and/or budget issues impacting each community. Work in photos capturing “essence” of each community • Tell financial story in a clear and concise way in terms of early forecasts versus today’s economic realities STRATEGY Show value/ROI (return on investment) for creating sustainable revenue source : Creating a sustainable revenue source will not only fill the financial gap facing the town, but also provide tangible economic benefits safeguarding the community’s way of life and residents investment. Tactics -Showcase tools that preserve quality of unique character that sustainable revenue source will allow : • Comprehensive Plan: Allows Town of Westlake to preserve its uniqueness (low density housing, corporate campuses, high aesthetic standards, controlling type of growth to retain our small town feel) by following Town’s comprehensive plan and development standards. Nearly 50% of the town is not developed. Controlling how that develops is essential, but that when fully developed, approximately 70% of the Town will office land use, which does help build a favorable tax base for residences. • Design Standards and other tools the Town uses to preserve the community • Capital Improvements Plan: Allows community to assess costs of maintaining public infrastructure and plan preserve it…no revenue source for that • Public Safety: Allows community to not only pay for expected level of public safety, but have those services delivered in a manner the community deems best. STRATEGY Use third party ambassadors to create and showcase community support : In a community comprised largely of very successful individuals, it is important to give them ownership of major decisions impacting them. Many times, these individuals tend to “push back” in the face of being told what to do by government. When ideas come from them or their friends and neighbors, they will have ownership of decisions Tactics -Council to identify and engage community/neighborhood opinion leaders and personally educate them on the challenges they face. Work with them to develop ownership and solutions. They, in turn, will become advocates and champions that not only influence, but balance those opposed. : 6/25/10 21 -Assist in creating community testimonials to be disseminated from sources other than the City STRATEGY Use existing communications tools to educate, only after third parties have been educated and engaged and residents receive information in person. : It is important that advocates and champions feel exclusive. Sharing information with them first before taking it to all residents can be helpful in giving them ownership and engaging them to take a supportive position. -Council Members should begin third party recruitment shortly before public roll out of theme and messages Tactics: -Neighborhood meetings should be held next, so residents can hear the concept in person rather than read about it • Leave behind information should be included that makes it easy for residents to access information, staff and the elected representatives • It is critical that staff is completely open and accessible if the expectation is established -Use newsletter and emails to begin public campaign to introduce theme “Why did you come to Westlake” • Seek thoughts and resident feedback by creating a feedback mechanism • Put all information relative to the issue in a prominent place on the website o Budget graphs o List of unavoidable financial liabilities including school debt service o List of benefits from developing sustainable revenue source STRATEGY Identify and proactively address issues that can divide community : Westlake is recovering from issues that divided the community, including the school and professionalizing the government. It is important that those wounds are not reopened for current and long-term community health. -Develop information that highlights on-going financial obligations (including debt service for Westlake Academy). Break out other services that would be on the table. Tactics: -Highlight fact that a Westlake government is the only way residents have to control what will happen to their community including: • Comprehensive planning • Zoning and high quality design standards • Planning for infrastructure needs through CIP • Public safety quality and response times STRATEGY: Proactively engage local media 6/25/10 22 Though Westlake does not have dedicated media coverage and media’s overall impact on local issues is marginal, there is still value in proactively working with the media on this issue. Having reporters/editors armed with the facts can provide a valuable third party refute to misinformation being circulated by opposed residents. -Schedule desk side visit with local reporter and editor covering Westlake community issues Tactics: -Work with local reporter to write a history story that led to the position the Town faces: o Dynamics leading to constructing Academy o Reinforce fact that Town is obligated to pay bonds KEY MESSAGES : • We moved to Westlake for a reason o It is the most special and unique place in Texas o WA as a tool that positively affects economic development and its economic base • It’s all of our responsibility to make sure it stays that way o Looking for solutions for a sustainable revenue source o This is an “investment in us”, the residents of Westlake • What is the responsible thing to do to keep Westlake the special and unique place it is today? o Identifying a sustainable source of revenue is critical to our future o Tangible benefits of having that sustainable revenue source, including services or improvements not currently offered • Westlake is only about 50% developed o We have opportunity to ensure it develops in a way that keeps our community the special and unique place it is • We have an obligation for today, but also for our community’s future o Steps today are important to what our community becomes in 5, 10 or 50 years Reactive: • Good, bad or indifferent, we have financial obligations we must honor o Including debt service on the school • That is beyond our control, but we must look forward and do what is responsible o Preserve our community • We are living in a new normal, and there are steps we must decide to take if we want to address it 6/25/10 23